The European Commission has taken another important
step to uncover and put an end to hard-core cartels by adopting a revised Notice
on Immunity from Fines and Reduction of Fines in Cartel Cases (the
“Leniency Notice”). The revised Leniency Notice clarifies the
information an applicant needs to provide to the Commission to benefit from
immunity, and introduces a so-called marker system for immunity applicants. It
also clarifies the conditions for immunity and reduction of fines and introduces
a procedure to protect corporate statements made by companies under the Leniency
Notice from being made available to claimants in civil damage proceedings. The
revision takes account of public consultations in February and October
2006.

Competition Commissioner Neelie Kroes said “Secret cartels undermine
healthy economic activity. To root out cartels we need heavy sanctions to deter
cartels and an efficient leniency policy providing incentives to report them.
These changes will further strengthen the effectiveness of the
Commission’s leniency programme in the detection of cartels and offer
clearer guidance for business."

Leniency allows the Commission to offer full immunity or a reduction in the
fines that would otherwise have been imposed on a cartel member in exchange for
disclosure of information on the cartel and cooperation with the
investigation.

Main aspects of the revision

Improvements have been made in several areas of the Leniency Notice to
provide more guidance to applicants and to increase the transparency of the
procedure. These improvements reflect more than four years of experience in
applying the 2002 Leniency Notice (see IP/02/247
and MEMO/02/23)
and are also fully in line with the European Competition Network's Model
Leniency Programme (see IP/06/1288
and MEMO/06/356).

The immunity thresholds have been clarified to:

set out explicitly and clearly what type of information and evidence the
applicants should submit to qualify for immunity

link the threshold for immunity to information needed by the Commission to
carry out a “targeted” inspection in connection with the alleged
cartel, which will allow for the inspections to be better focused

clarify that applicants are not required to produce in their initial
application for immunity information and evidence, the collection of which would
jeopardise a Commission inspection, and which can be provided under the
continuous cooperation obligation

state explicitly that the applicants need to disclose their participation in
the cartel.

Concerning the threshold for reduction of fines
the Notice makes it clear that evidence that requires little or no corroboration
will have greater value. Such evidence will also be rewarded outside the normal
bands for reduction of fines, when it is used to establish any additional facts
increasing the gravity or duration of the infringement.

The conditions for immunity and reduction of fines have been made more
explicit by:

introducing flexibility as to the point in time when applicants should
terminate their participation in the alleged cartel activities

clarifying that genuine cooperation requires in particular that the
applicant provides accurate, and complete information that is not
misleading

extending the obligation not to destroy, falsify or conceal information to
cover also the period when the applicant was contemplating making an
application

stating explicitly that the obligation on continuous cooperation concerns
also applications for a reduction of fines.

Another innovation in
the revision is the introduction of a discretionary marker system. Where
justified, an application can be accepted on the basis of only limited
information. The applicant is then granted time to perfect the information and
evidence to qualify for immunity.

In order to ensure that applicants that cooperate with the Commission
investigation are not impaired in their position in civil proceedings, as
compared to companies who do not cooperate, the Commission has developed a
procedure to protect corporate statements given under the Leniency Notice
from discovery in civil damage procedures. This is essential to maintain
effectiveness of the Leniency Notice.

The revised Leniency Notice will come into force on 8th December
2006, when it is published in the EU Official Journal. From that date it will be
applicable to companies which file for leniency in a cartel case, as long as no
other company is already co-operating with the Commission under the Leniency
Notice in the same cartel. The procedure to protect corporate statements will be
applied from the moment of publication of the Notice to all pending and new
applications for leniency.